Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

Diamond Foods

(

DMND

) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Diamond Foods as such a stock due to the following factors:

  • DMND has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.9 million.
  • DMND has traded 751.134000000000014551915228366851806640625 options contracts today.
  • DMND is making at least a new 3-day high.
  • DMND has a PE ratio of 28.
  • DMND is mentioned 0.26 times per day on StockTwits.
  • DMND has not yet been mentioned on StockTwits today.
  • DMND is currently in the upper 20% of its 1-year range.
  • DMND is in the upper 35% of its 20-day range.
  • DMND is in the upper 45% of its 5-day range.
  • DMND is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on DMND:

Diamond Foods, Inc., a packaged food company, processes, markets, and distributes snack products and nuts. It operates in two segments, Snacks and Nuts. The Snacks segment offers microwave popcorn products and potato chips under the Kettle and Pop Secret brands. DMND has a PE ratio of 28. Currently there are 4 analysts that rate Diamond Foods a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Diamond Foods has been 275,900 shares per day over the past 30 days. has a market cap of $1.0 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.24 and a short float of 6.8% with 11.98 days to cover. Shares are up 14.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Diamond Foods as a

hold

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • DIAMOND FOODS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIAMOND FOODS INC continued to lose money by earning -$6.29 versus -$8.13 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus -$6.29).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 106.0% when compared to the same quarter one year prior, rising from -$105.63 million to $6.29 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The gross profit margin for DIAMOND FOODS INC is currently lower than what is desirable, coming in at 32.29%. Regardless of DMND's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.38% trails the industry average.
  • The debt-to-equity ratio is very high at 2.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, DMND maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.

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